/// Fact-Checking the Spectrum Food Fight

February 21, 2013  |  All Things Digital

The FCC has undertaken an important quest to use an incentive auction to repurpose broadcast spectrum for wireless broadband. Some in Washington oppose designating any of the recovered spectrum for unlicensed technologies. They see this process merely as a way to raise money for the U.S. Treasury, rather than focusing on the much larger and more important impact it would have on the national economy — and they believe that designating any of the recovered spectrum for unlicensed technologies, which was explicitly authorized by Congress, would reduce the auction revenue that would flow to the US Treasury. Others support an unlicensed designation and believe that a large unlicensed band will lead to “free” Wi-Fi. Unfortunately, both sides of this battle are wrong. Those who want to auction every last hertz of spectrum overlook two basic economic facts about unlicensed spectrum: First, if spectrum is as valuable as mobile carriers claim it is, reducing the amount of spectrum available for auction by dedicating some of it for unlicensed use should drive up the price of the remaining auctioned spectrum. So designating some unlicensed spectrum will not reduce proceeds delivered to the Treasury. Given the inelastic demand for spectrum, the price increase for the spectrum that is auctioned will result in no loss of revenue.

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Fact-Checking the Spectrum Food Fight

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